Michael J. Boskin is Professor of Economics at Stanford University and Senior Fellow at the Hoover Institution. He was Chairman of George H. W. Bush’s Council of Economic Advisers from 1989 to 1993, and headed the so-called Boskin Commission, a congressional advisory body that highlighted errors in … read more

Comments

Um! These economists most of the time, suffer from vanity and hubris to believe that they can FIX all economic problems! We can fix most physics and technology problems of today or find alternate methods using laws of nature. But, do these economists know enough about controlling or manipulating anxiety , buying, spending of consumers? Just guessing here of course! Read more

A series of what would have at one time been considered outlandish ideas, such as a war on cash, forgiving debt through a debt jubilee, giving everyone a guaranteed income, and even injecting money into the economic system by dropping it from a helicopter have all found their way into conversations about ways to jump start the economy.

These are all over the top solutions offered to resolve the problem of slow economic growth in a global economy mired in debt. These efforts should be considered not real solutions but desperate attempts to render the laws of economics moot and move us further into the false state of modern voodoo economics. The article below delves into how these help to perpetuate the false illusion all is well.

http://brucewilds.blogspot.com/2016/05/belief-in-false-illusion-of-stability.html Read more

Why should government be responsible for combating recession at all? Business collectively speaking should be responsible. I hear you all sniggering but hear me out.

Business has the tools but not the incentive to combat recession. Business can expand, hire, pursue opportunities, do research, acquire other businesses and in general produce growth and hopefully prosperity.

So how does one incentivise business to pursue growth?

Here are some ideas off the top of my head:

1. Tax on idle capital. So if apple is holding cash a tax on that cash.

2. Local business rights (to sell their product) being dependent on a quid-pro-quo. You want to sell iPhones in New York? Then you need to do something to uplift the area - e.g. move one of the Apple research teams to New York. This is aimed more at corporations and big brands than at small operators. Read more

Its a classic IMF/liberal economics prescription - where did you say it worked? What taxes you recommend to be cut regressive ones like VAT/sales taxese or progressive ones like income tax. Cutting transfer payments like pensions as in Greece - are there gains there. Your prescription - cui bono? Read more

AMMUNITION CAN BE RESTOREDThe AMMUNITION was available to nurture GROWTH in a FEW GEOGRAPHIES - and is denied to those that need them now.Credit creation hubs create Investment hotspots due implicit bias that distorts Economic Geography.Capital Gains reflects the resultant concentrations - especially when the AMMUNITION is depleted.This question is the crux of the Inequality predicament caused by Economics of Geography.

And once the question is understood at the atomic level, the answers are equally blatant.The AMMUNITION must be available to all - achieved either by Migration OR by Investment Equalization.The AMMUNITION that creates Capital Gains - is Credit creation and Investment Flows.And Sovereign Debt is perhaps the greatest Credit Creation Hub - Banking Headquarters are supplementary Hubs.State Interventions are needed by those that were denied Inclusiveness.

Credit Creation Capacities are manmade constructs - The AMMUNITION.Credit flow universally creates Growth Epicentres and Valuations.Sovereign Debt is tantamount to Bank Deposits @ The Treasury.Assets created by Sovereign Debt have Valuations.And VALUATIONS can be LIMITLESS.Especially when Interest Rates are at Zero - Asset creation can be limitless.OUT OF AMMUNITION - appears to be MYOPIA.Vision and Ammunition both can be restored.Nobel Laureates must be The Doctors.Made by The Almighty.For universal health.Read more

Even if a lot could be said about it, and against it, lets take your opinion that Portugal is reluctant to respect the IMF's proposals as being a true premise.

Could you further explain why you put this "true premise" about such a small economy as being so risky to the global economy as being worth being put at a similar level as other problems that, to the naked eye, seem so much bigger - e.g. Europe’s weak banks, China’s distorted property market, political uncertainty in the West, historically high private and public debt or major oil-market disruptions.

Since your text is posted in the Economics forum, not Politics, l believe that you must have strong economic facts to backup your opinion.

The problems with the world's economies are not the fault of the US. Unlike most of the world the US economy is growing, albeit at a slow rate. However the US is now integrated into the global economy and when the rest of the world is not growing the US suffers. The EU and South America are going to have to fix their economies before the US can do better. Read more

While it may be true that there aren't many public investments with a high rate of return, ythat doesn't mean that there are no such investments.

As the various electrical generating and transmission projects (e.g., the TVA, the Bonneville Power Dam, Hoover Dam, etc., and their related transmission lines) and the development of the interstate highway system have shown, increasing the amount of pollution free electrical energy available throughout the nation and improving transportation systems that enable the fast and efficient flow of goods and materials both have high rates of return. Now that we are in the information age, developing faster data transmission and increasing the available bandwidth throughout the nation is likely to be another such public investment that will have a high overall rate of return. Read more

Nice essay. And not to disagree with anything you've said, but to add a few of my own points:

Massive stimulus got us to this point, not anything else.

QE simply pushed the economic can (of worms) further down the road.

Unemployment is low.

Consequently, all that needs repair in the U.S. economy is to increase aggregate demand.

The quickest way to do that is to drop the income tax rate for those earning less than $25,000./yr down to a 0% tax rate. Permanently.

Also, rolling back the Reagen-era tax breaks and the GWB tax breaks, will simply, but profoundly, stop money from flowing upwards through all 5 quintiles to the 1% -- who then invest that money in Asia, and not in North America where it could actually do some good for the economy here.

It's so simple to fix the present low-aggregate-demand moment, if the political will exists to make it happen.

Professor Boskin argues that to revive a stagnant economy, you "reduce future spending growth, especially on transfer payments" and cut taxes . But that is the classic policy for an economy overheating and inflationary.True, the last decades have put more and more credit in the hands of governments and consumers. It worked to produce growth. But the debt is now maxed out and incomes are stagnating. Does that look like overheating and inflation to the professor ? At least he will have to agree that another mechanism is needed to insert new liquidity into the real economy, if we want to bring about real progress with wages rises and decent savers' interest rates. Read more

Well certainly 1 trillion deficit spending a year should have created 20 millions jobs easily. Or just should have gave the trillion to 20 million lottery winners 50 thousands each (helicopter money )and have only one condition that spend it on an Uas economic output preferably a product.So where is the trillion deficit spending? Read more

If we have a lack of demand, the reason is really simple - not enough money in the hands of people who will spend it. It is a situation that does not easily self-correct because of downward wage rigidity. If we want to avoid a very slow, painful correction, we need to put more money into the real economy.

Usually, that can be done by reducing interest rates, but if interest rates hit 0, we need something else. "Quantitative easing" is almost (although not quite) useless. Just puts money into excess bank reserves. We either need some kind of "helicopter drop", or we need the government to borrow some of that money created by quantitative easing and spend it on real things. Either of these options would put money in the hands of people who would spend it. Read more

Yes, I have wondered, got frustrated and asked,why every one is "Out of Ammunition to Combat Recession? ". Every year big prizes are awarded like Nobel one's with all the pomp. But how do these fellows help ever present booms , busts and hopelessness of millions ? Read more

PS On Air: The Super Germ Threat

NOV 2, 2016

In the latest edition of PS On
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